In remarks to the Mediterranean Partnership of Securities Regulators, the International Swaps and Derivatives Association (ISDA) set out its current policy priorities for supporting “vibrant and resilient” derivatives markets, focusing on the Basel III capital framework, collateral modernization (including tokenization), derivatives reporting reform and voluntary carbon market development. On capital, ISDA highlighted cross-border fragmentation in Basel III implementation and argued for more risk-sensitive calibration of the Fundamental Review of the Trading Book (FRTB), citing an ISDA survey in which 10 of 26 global banks planned to use internal models for a much-reduced scope of trading desks. ISDA recommended recalibrating elements of the internal-models framework including the profit and loss attribution test, the risk factor eligibility test and non-modellable risk factors, and noted that US regulators are revising the Basel III endgame proposal. It also reiterated concerns that the Basel Committee’s prudential standard for crypto-asset exposures, scheduled for implementation from January 1, 2026, is overly conservative, while welcoming the Basel Committee’s announcement that it will review targeted elements. On collateral, ISDA pointed to operational practices and Common Domain Model (CDM) work to digitize key documents and automate cash collateral processes, and framed tokenization as a pathway to faster settlement and broader eligible collateral, including potential use of tokenized money market fund shares. On reporting, ISDA backed the European Securities and Markets Authority’s work to identify cost drivers and called for a holistic review of EU reporting across Markets in Financial Instruments Regulation (MIFIR), European Market Infrastructure Regulation (EMIR) and Securities Financing Transactions Regulation (SFTR) as a route to a single regime, while also noting the UK Financial Conduct Authority’s consultation on improving UK MIFIR transaction reporting and describing ISDA’s Digital Regulatory Reporting initiative. ISDA said it expects a revised US Basel III endgame proposal in the coming months and indicated it will assess calibration and impacts once published, while anticipating further progress next year on reporting simplification. It also noted that UNIDROIT is in the final stage of developing guidance intended to underpin legal certainty in carbon trading, alongside ISDA’s updated Verified Carbon Credit Transactions Definitions, including the latest iteration incorporating standards from the Carbon Offsetting and Reduction Scheme for International Aviation.
ISDA 2025-12-05
International Swaps and Derivatives Association urges FRTB recalibration and streamlined reporting while advancing tokenized collateral and carbon market standards
The International Swaps and Derivatives Association (ISDA) outlined its policy priorities for derivatives markets, emphasizing Basel III capital framework adjustments, collateral modernization, derivatives reporting reform, and voluntary carbon market development. ISDA highlighted concerns over Basel III's cross-border fragmentation and prudential standards for crypto-assets, advocated for operational improvements in collateral processes, and supported simplifying regulatory reporting in the EU and UK.